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Safeguard Trigger Penalizes U.S. Beef in Japan

The Japanese government announced on Friday that imports of U.S. beef reached the level to trigger an automatic increase in the tariff rate on frozen U.S. beef. Japan is the top export market for U.S. beef and 2017 has seen impressive increases in the amount of beef shipped to Japan. Unfortunately, it is that impressive increase that led to higher tariffs through March 31, 2018. Tariffs will increase from the normal level of 38.5 percent to 50 percent for the next nine months.

The safeguard was triggered because U.S. exports of frozen beef to Japan were more than 17 percent higher in the first quarter of 2017 than in 2016. The 17 percent threshold was established in a 1994 World Trade Organization agreement that allows Japan to maintain safeguards for frozen and fresh beef imports.

This action could lead to significant market distortions. It will certainly not shut down the shipment of frozen U.S. beef to Japan. However, it will make it more expensive and less competitive with other exporting countries. Australian exporters are likely poised to gain the most from this safeguard trigger. Australia already had a trade advantage over the U.S. due to the Japan-Australia Economic Partnership Agreement. The tariff on Australian beef is 27.2 percent, about half of the increased U.S. tariff. This development further emphasizes the need for a U.S. trade agreement with Japan.